Oil heads for weekly decline on demand concerns amid tight supply; Brent retreats to $92/bbl

Brent futures were down 32 cents, or 0.4 per cent, at $92.95 a barrel. US West Texas Intermediate crude (WTI) futures fell 23 cents, or 0.3 per cent, to $89.41 a barrel. After rallying more than 10 per cent in the previous three weeks on concerns about tight supply, both benchmarks were set to ease about 1 per cent this week, according to news agency Reuters.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a October 19 expiry, were last trading flat at ₹7,483 per bbl, having swung between ₹7,420 and ₹7,580 per bbl during the session so far, against a previous close of ₹7,483 per barrel.

What’s weighing on crude oil prices?

-US Federal Reserve officials warned of further rate hikes, even after voting to hold the benchmark federal funds rate steady at a meeting this week. Higher interest rates increase borrowing costs, which could slow economic growth and reduce oil demand.

-The Bank of England (BoE) held its key interest rate at 5.25 per cent following 14 hikes in a row to fight soaring inflation. The decision to freeze the borrowing costs came one day after official data revealed a cooling of consumer price rises in Britain.

-Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect in order to stabilize the domestic fuel market, the Russian government said on Thursday.

-‘’So far this year, Russia was the world’s single biggest seaborne exporter of diesel-type fuel (and shipped more than 1 mbpd), narrowly ahead of the US, according to Vortexa. We expect prices to remain buoyed as fuel export cuts offer fresh boost to the prices,” said Ravindra Rao, CMT, EPAT, VP – Head Commodity Research, Kotak Securities Ltd

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Updated: 22 Sep 2023, 10:38 PM IST